Shinta Widjaja Kamdani, president of the Indonesia Business Council for Sustainable Development, said the government must provide incentives for the private sector and issue strong regulations to address future challenges related to climate change. (JG Photo/Yudha Baskoro)

Jakarta. The Indonesia Business Council for Sustainable Development believes the government must provide incentives for the private sector and issue strong regulations to address future challenges related to climate change.

Business council president Shinta Kamdani said the private sector will need help to deal with the cost involved in making industries sustainable.

"When we talk about sustainability, we also need to talk about the cost issue, because [the transformation period] involves higher costs," Shinta told the Jakarta Globe after her address during GlobeAsia's "Beyond Profitability" seminar in Jakarta on Wednesday (06/11).

She added that it would be difficult to make private industries sustainable without government incentives.

"Perhaps the government could provide incentives for them. For example, fiscal incentives, such as cooperation between the government and banks to provide lower interest rates, feed-in tariffs and many more," she said.

Shinta – who is also deputy chairwoman for international cooperation at the Indonesian Chamber of Commerce and Industry (Kadin) – said the government must also raise awareness in the private sector, particularly among small businesses, which she emphasized are mostly unaware of the effects of climate change.

"Big corporations are probably aware of this issue of climate change, but not small-scale businesses," she said.

Shinta said the private sector is willing to comply with regulations on sustainability aimed at preserving natural resources, but that the government should issue regulations and other programs to further encourage them to do so.

She expressed hope that the government can show stronger political will in this matter, especially since Indonesia has obtained lots of funds from developed countries and international organizations towards that goal.

Incentives

Teddy Caster Sianturi, head of a research center on the development of green and environmental industries at the Ministry of Industry, said such incentives would be the most effective method to make Indonesian industries sustainable.

However, he added that some regulations still do not support sustainability in the industrial sector.

"For example, higher taxes are still imposed on the plastic recycling industry, despite the fact that businesses that are committed to the government's environmental programs deserve incentives," Teddy said.

He said the recycling industry, for example, has encouraged workers in the informal sector to contribute to waste management by collecting plastic waste, which is processed into bags.

"However, other ministries impose taxes and high prices on these bags," he said.

Teddy added that the government should provide incentives for industries that contribute to reducing greenhouse gas emissions.

"We must create a mutual understanding with other ministries to create the right policy related to this issue," he said.